Smart Exporter guide to doing business in Dubai
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1 Smart Exporter guide to doing business in Dubai Become a Smart Exporter! call enquiries@smartexporter.co.uk visit Smart Exporter is an international trade skills development programme, delivered in partnership by Scottish Development International (SDI), Scottish Chambers of Commerce (SCC) and funded by the European Social Fund.
2 Contents Introduction P5 P5 Some quick facts and figures Key sectors Opportunities in dynamic Dubai A truly global city, there s nowhere on earth quite like Dubai. Where the Arabia of old co-exists with the world s largest man-made harbour and the world s tallest building; Dubai is a place of contrasts. Here, traditional and modern, east and west blend seamlessly to produce a vibrant, dynamic city with a very distinctive personality. There are fantastic opportunities in Dubai to be explored by Western companies of all shapes and sizes. This Smart Exporter guide is full of useful info and tips to get you started. Some useful tips P6 Overview P6 Incentives for foreign investors P6 Free sectors P7 Religion P7 Climate P7 Banks and foreign exchange P7 Building relationships P8 Greetings P8 Body language P8 Business hours P9 Translators P9 Business meals P10 Things to remember P11 Licence P11 Legal structures for business P12 Did you know P14 P15 How we can help Useful addresses
3 Some quick facts and figures Population: million Area: 4,114 sq km Time zone: Dubai is 4 hours ahead of GMT Language: Arabic Local currency: UAE Dirham GNI per capita: US $25,000 Main export: Crude oil, natural gas, re-exports, dried fish and dates Ethnic groups: Emirati 19%, other Arab and Iranian 23%, South Asian 50%, other expatriates (includes Westerners and East Asians) 8% Government: Constitutional monarchy Key sectors The past 10 years have witnessed incredible growth throughout all sectors of Dubai s economy. Despite having abundant oil reserves, the country has always made efforts to broaden its economic base. Sound and effective economic policies have reduced its dependence on oil and natural gas revenues, and the economy is diversified, relying heavily on trade, services and finance sectors. Significant investments in cutting edge technology industries and projects like Dubai Internet City and Dubai Media City have ensured that Dubai is at the forefront of the global economy. With its central geographic location between Asian and European markets, Dubai has also worked hard to establish itself as a popular and accessible tourist destination. 4 5
4 Overview Dubai is the second largest member of the United Arab Emirates (UAE). It s home to the most important port and is the commercial capital of the UAE. It offers easy access to the 1.5 billion consumer markets situated in Africa, West Asia, CIS countries, and Eastern Europe as well as the areas surrounding the Red Sea and the Gulf. In fact, Dubai International Airport offers 300 flights daily to and from some 100 destinations. Having long since consolidated its position among the top oil producing nations, the diversified economy of the UAE is doing well and it has swelled by more than six times over the past 26 years, to become the fourth biggest economy in the Arab world. In general, establishing a business presence in Dubai is relatively easy and straightforward. With progressive, forward thinking government policies in place, the business environment in Dubai actively encourages foreign investors. The government provides all industrial facilities, and has brought in several liberal commercial laws and regulations that are hugely appealing to overseas businesses. Generous incentives are granted to investors along with the simplicity of procedures for practicing business in UAE. What makes doing business in Dubai even more attractive is the fact that taxation is minimal and mostly non-existent. The only industrial sectors that are significantly assessed in taxation are banking, oil and cigarette manufacturing. Incentives for foreign investors The country offers lucrative investment incentives and opportunities to international investors that are not generally available elsewhere. Significant among these are absence of corporate and income tax, no personal income taxes, no foreign exchange controls, 100% repatriation of capital and profits. Free sectors Dubai s many free zones are also an important aspect of the city s growing economy. Established as a way of attracting more foreign investment, free zones come under unique laws regarding ownership, taxation and labour. Normally businesses in the rest of Dubai require at least 51% ownership by a UAE national. But free zone businesses can have 100% foreign ownership. Free zones also tend to assist new businesses in the set up process. Presently, there are over a dozen free trade zones in UAE, offering more or less the same incentives. Religion Islam is the official religion of Dubai with the majority being Sunni Muslims. Dubai is one of the most liberal and tolerant places in the Gulf and followers of most other religions are welcomed. Friday is a holy day so most government offices, businesses and schools are closed. Climate Dubai has a subtropical and arid climate with the weather usually very hot and often humid. The temperature ranges from a pleasant 10 C (50 F) in winter to over 40 C (104 F) in the summer. This means humidity in Dubai is roughly 60% in the summer. Rainfall is sporadic and light, with rainfall primarily occurring in the first quarter of the year. Banks and foreign exchange Dubai has a large network of local and international banks offering a wide array of commercial and personal banking services. All the banks are controlled by the UAE Central Bank. Banking hours are usually Saturday - Thursday, 8.00am pm. Building relationships Dubai has developed over the past three decades into a cosmopolitan, truly international business location. However there are still many local customs you have to observe, and a professional etiquette to learn, before you can successfully secure business deals and build solid work relationships. In Dubai business is conducted on the basis of personal relationships and mutual trust. So it s vitally important to build on these. Although it is changing rapidly and large firms are structured as in the rest of the world, companies are still often a family affair, with the ultimate decision-maker being the head of the family. Even if this is not the case, it is essential to clearly identify the decision-maker. Good manners and courtesy are prized attributes. Although you should always arrive on time, punctuality isn t considered all-important. You may well be kept waiting before or during your meeting. Take the time to chat and drink the coffee and establish a relationship with your hosts. Don t be put off if your meeting is interrupted by other guests or telephone conversations. Be aware that what may seem like evasiveness on the part of your host is usually an unwillingness to say no to your face. Once a deal is made, an Arab businessman s word is his bond and you are also expected to perform accordingly, even if the agreement is just a verbal one. Hospitality is a way of life in the Arab world and business is frequently conducted over lunch or dinner more than likely in a hotel or restaurant. It is also considered polite to return the invitation. 6 7
5 Greetings When doing business in Dubai, it is proper etiquette to shake hands with the right hand, as the left hand is considered unclean. It is also inappropriate for a man to shake hands with a woman unless she extends her hand first. You should acknowledge each person in the room before the business meeting begins, and take a few minutes to engage in small talk before getting down to business. Any discussions involving politics or religion should be avoided. Body language Hand gestures should not be used in excess when attending business meetings in Dubai, and it is considered rude to point. It s important to sit up straight during meetings and to avoid crossing your legs, as slouching and crossed legs are considered improper behaviour. You should avoid checking your watches or phone in meetings as this sends a message that the businessperson is bored. Translators It is acceptable etiquette for international professionals to request that a translator be present at business meetings. Some companies in Dubai do not permit female translators, so you should do research to figure out which organisations will permit this. Proper etiquette also suggests presenting business cards that are translated in Arabic on one side. Business meals It is quite common for professionals in Dubai to schedule a lunch meeting with clients. Discussing business over a meal is considered acceptable etiquette. Lunch meetings are scheduled much more often than dinner negotiations, as businesspeople in Dubai prefer to be finished with work at 5.00 pm. Professional meetings may take place at restaurants that do not serve alcohol. It s best not to order alcohol with a meal, as this could cause offense. Business hours Don t try to schedule a business meeting on Friday in Dubai, as Friday is considered a day of prayer and rest. It is also not appropriate to call Arab professionals on this day to discuss business. 8 9
6 Some DON Ts to remember DON T dress down. A suit and tie is the norm, whatever the weather. Women in Dubai on business should dress modestly. While Dubai is very cosmopolitan, always remember its roots in Islamic culture. DON T bring up business immediately. Your first meeting with a Sheik or high-level Emirati may be a general, non-specific chat. When it s time to talk business, your host will bring it up. It might not happen until the second meeting, so be patient. DON T forget to ask where you re going. There are no street numbers and there s every chance your taxi driver will be a new immigrant himself and has no idea where he is going. Ask the hotel concierge for directions before you go. DON T fly in on a Sunday you ll miss the beginning of the working week, which runs from Sunday through Thursday. DON T go in July or August. Most the decision-makers are on holiday then, because it s so hot and humid. Licence Before you can do business in Dubai, you will have to acquire a license. Licenses for businesses in Dubai are divided into industrial licenses for manufacturing and industrial businesses, professional licenses for professional services and commercial licenses for trading. People who wish to do business in Dubai will have to acquire the appropriate license from the Department of Economic Development. In some cases, there are exceptions to the rule. Financial institutions that want to do business in Dubai will have to get approval from the United Arab Emirate s central bank. Approval is required from the ministry of Finance and Industry for manufacturing while the Department of Health must be consulted for anything medical in nature. Legal structures for business In Dubai, foreign companies operate in one of three ways: with a local sponsor, through a partnership with a UAE national or company, or through a private limited company or public shareholding company
7 Did you know? Dubai is the fastest growing city in the world Dubai has one of the highest per capita incomes In Dubai, there are no taxes on income and there are no personal taxes either In Dubai Emirates Mall, you can ski indoors while shopping, measuring 400 meters and using 6000 tons of snow Burj Dubai is the world s tallest building 80% of the residents of Dubai are foreigners Dubai is the Middle East supply hub for the jewellery market Dubai is the world s second largest distributor of bullion. It imports 360 tonnes and re-exports almost all of it Dubai has the first man-made island in UAE, the Palm Island No matter which part of Dubai you are in, you will hear calls to prayer at least five times a day. Even in shopping malls, the calls to prayer are put out over the speakers, to remind Muslims that it is time to pray Dubai shares legal, political, military and economic functions with the other emirates, within a federal framework Dubai has the largest population of all the United Arab Emirates (UAE) Apart from Abu Dhabi, Dubai is the only emirate to have veto power over critical matters of national importance in the country s legislature Since 1833, Dubai has been ruled by the Al Maktoum dynasty Trade, real estate and financial services provide Dubai with majority of its revenues Revenues from petroleum and natural gas contribute less than 6% to the economy of Dubai 12 13
8 How we can help The transition from national to international business is an exciting step which can significantly grow your business. Smart Exporter support can help your business achieve global growth through an international network of key contacts and expertise that will help make the transition a smooth one. Support will: Assess your export potential. Visit Increase your knowledge of international markets Assist with the development of your international strategy Upskill your business in preparation for exporting Enable your business to tap into a network of international experts Help with trade documentation, customs and taxes Become a Smart Exporter! Call: enquiries@smartexporter.co.uk Visit: Useful Addresses SDI Local Offices Dubai Scottish Development International, c/o British Embassy, Al Seef Road, Dubai. Initial Contact: Colin Crabbe - International Manager, Dubai office Telephone: UK Trade & Investment To find out more about commissioning work, please contact your local UKTI office. See Team: UKTI Address: British High Commission Contact Name: Justin Davies Role: National Unit Manager Telephone (include international dialling code): address: Justin.Davies@fco.gov.uk 14 15
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